FinCEN Withdraws Crypto Rules as CFTC Seeks Clearer Market Framework

The Financial Crimes Enforcement Network (FinCEN) has withdrawn two proposed regulations related to cryptocurrency, signaling a potential shift in the U.S. approach to crypto regulation. The move comes as regulators reassess rules based on industry feedback and public comments.

One of the withdrawn proposals targeted transactions involving non-hosted wallets, which would have required financial institutions to report transactions exceeding $10,000 and maintain records for transactions over $3,000. The other proposal addressed crypto-mixing practices. FinCEN emphasized that the withdrawal does not reduce current compliance obligations but prevents these proposals from becoming future rules.

Meanwhile, the Commodity Futures Trading Commission (CFTC) is advancing clearer rules for crypto markets. The CFTC has opened a public-comment period for retail crypto transactions under Section 2(C)(2)(D), aiming to establish a national framework for regulating U.S. crypto markets. The proposed rules could include customer-asset segregation, capital safeguards, anti-money-laundering controls, and proof of reserves.

The CFTC’s framework seeks to define a new market category for cryptocurrencies and digital assets while preventing abusive practices. The proposed rules would require platforms offering margin, leverage, or financing to follow a dedicated federal registration pathway with stronger controls around customer assets and proof of reserves. Public comments on the framework are due within 60 days.